Air Pollution

Overview

Air pollution is one of the biggest environmental challenges to public health facing China today. The major source of air pollutants in Chinese cities has gradually shifted from conventional coal combustion to a mixture of coal combustion and motor vehicle emissions.

Common waste gas emissions are primarily composed of four main pollutants- SO2, soot, industrial dust and Nitrogen Oxide (NOx). Although emission trends have shown improvement in recent years, in 2010 the total SO2 discharge in China was still 21.85 million tons and total NOx emissions, monitored since 2006, had risen by 9.4 percent over the previous year. (See chart below)

Year

SO2 Discharge

(10,000 tons)

Soot Discharge

(10,000 tons)

Industrial Dust

(10,000 tons)

NOx

(10,000 tons)

Total

Industrial

Municipal

Industrial

Industrial

Municipal

Total

Industrial

Municipal

2001

1947.8

1566.6

381.2

1069.8

851.9

217.9

990.6

2002

1926.6

1562

364.6

1012.7

804.2

208.5

941

2003

2158.7

1791.4

367.3

1048.7

846.2

202.5

1021

2004

2254.9

1891.4

363.5

1094.9

886.5

208.4

904.8

2005

2549.3

2168.4

380.9

1182.5

948.9

233.6

911.2

2006

2588.8

2237.6

351.2

1088.8

864.5

224.3

808.4

1523.8

1136

387.8

2007

2468.1

2140

328.1

986.6

771.1

215.5

698.7

1643.4

1261.3

382

2008

2321.2

1991.3

329.9

901.6

670.7

230.9

584.9

1624.5

1250.5

374

2009

2214.4

1865.9

348.5

847.7

604.4

243.3

523.6

1692.7

1284.8

407.9

2010

2185.1

1864.4

320.7

829.1

603.2

225.9

448.7

1852.4

1465.6

386.8

YoY Growth Rate（%）

9.4

14.1

Source: “2011 Report on the State of the Environment in China,” released by the Ministry of Environment in June 2011

In response to these trends, the Chinese Government has focused some policy and regulatory attention on measures aimed at mitigating the emissions of dangerous nitrous oxides, with one such example being the Ministry of Environmental Protection‘s ―Notice of Fossil-Fuel Fired Power Plant Nitrogen Oxide Emission Prevention and Treatment Policy,‖ issued on January 27, 2010. This official government policy has established the framework by which NOx emissions reduction actions will be taken under the 12th 5YP, which took effect on January 1, 2011. The policy applies to all coal-fired power plants and co-generation units, 200 MW or larger, except in designated ―Focus Areas,‖ where it applies to all units regardless of size. In addition, it is mandatory that all new, rebuilt, or retrofitted units that have undergone expansion install Low- NOx Combustion Technologies. All units currently in operation, within their scheduled operating life cycles, that do not meet stipulated NOx emission standards are required to install flue gas de-NOx technology.

Another notable measure put forth by the Chinese Government in 2011 is the revision of China‘s Ambient Air Quality Standards. In late 2011, China released a revised version of the standards for public opinion soliciting, which for the first time includes monitoring of PM 2.5 in the monitoring of ambient air quality. These standards are scheduled to be released in early 2012, with compulsory enforcement beginning in 2016. These new standards have triggered a tremendous round of equipment purchases throughout China, bringing about huge market opportunities for producers of PM2.5 monitoring equipment.

China‘s 12th 5YP (2011-2015) is further strengthening the monitoring market. In his speech at the 2009 Conference on China Environmental Monitoring Work, Vice Minister Wu Xiaoqing outlined the top priorities of environmental monitoring work for the 12th 5YP. Given these priorities, U.S. air monitoring equipment suppliers should focus on the following market opportunities in China from 2011-2015:

Expand existing monitoring networks to rural areas.

Increase monitoring capacity to achieve total volume monitoring of pollutants.

The various plans and regulations mentioned above will invariably trigger commercial opportunities in the air pollution market. U.S. firms are facing both domestic and international competition, including government-subsidized Japanese and European competitors. Though experiencing rapid growth, the domestic industry is still in a nascent stage of development, due to its short development history, decentralized management, inadequate financing and poor enforcement. U.S. air quality monitoring equipment is well received, and is often considered high-quality in terms of data accuracy, timeliness and product lifecycle. In order to seize these emerging opportunities, U.S. companies should develop suitable market entry and pricing strategies.

Rising concerns about China's environment have led to a surge in demand for the following environmental monitoring instruments:

1. Automatic air monitoring systems on the ground: high value-added equipment which is automatic, multi-functional, instant, systematic, and intelligent is considered the most promising in China. Typical products:

2. Remote monitoring systems: Investments will also increase for satellite ground systems and satellite image analysis systems to analyze the quality of the environment and changing long-term trends. China's emphasis on the protection of the ecological environment has created an enormous demand for remote sensing satellites and monitoring equipment. The industry is gradually transferring from solely ground monitoring stations to both ground and remote monitoring. Potential segments include:

Vehicle-borne equipment, such as mobile monitoring vans

Ship-borne equipment

Satellite-borne equipment and instruments, such as lesser radar monitors for pollution

GSM/GPRS modem technology (allowing remote control and data retrieval from air quality monitoring stations located almost anywhere)

3. Quality Assurance (QA) and Quality Control (QC) laboratory equipment, which is needed in all monitoring stations and laboratories. Instruments include: